Trump Pressures Iran With Tariffs That Could Raise Prices in US

US President Donald Trump has once again drawn his go-to diplomatic weapon — tariffs, this time to coerce the Iranian government to end its bloody crackdown on nationwide protests. Trump said in a social media post on Monday he would impose a 25% tax on imports to the United States from countries that do business with Iran.

The sanctions could hurt the Islamic Republic by reducing its access to foreign goods and driving up prices, which would likely inflame tensions in a country where inflation is running above 40%. But the tariffs could create blowback for the United States, too, potentially raising the prices Americans pay for imports from Iranian trade partners such as Turkish textiles and Indian gemstones and threatening an uneasy trade truce Trump reached last year with China.

The death toll from protests in Iran surpassed 2,000 people on Tuesday, activists said, as the hard-line Islamist government attempts to tamp down dissent against economic hardship and political repression. The Trump administration has offered scant details since announcing the new tariffs targeting Iran.

For instance, the White House has not said whether the taxes would be stacked on top of double-digit levies Trump imposed last year on almost every country on earth. Or whether he would exempt some energy imports as he has in the past. It's also unclear what legal authority the president is relying on to impose the import taxes. He invoked the 1977 International Emergency Economic Powers Act to justify his most sweeping tariffs last year. But businesses and several states have gone to court arguing that Trump overstepped his authority in doing so.

The Supreme Court is hearing the case and could throw out Trump's tariffs and force him to send refunds to the U.S. importers that paid them. Years of sanctions aimed at stopping Iran's nuclear program have left the country isolated. But it still did nearly $125 billion in international trade in 2024, including $32 billion with China, $28 billion with the United Arab Emirates and $17 billion with Turkey, according to the World Trade Organisation. Iran bought more than $6 billion worth of imports from the European Union that year. Russia and India also do considerable business with Iran. Energy dominates Iran's exports. Its top imports include gold, grain and smartphones.

Trump's attempt to pressure Iran is likely to cause collateral damage. Most prominently, his tariffs could upend his attempts to maintain a trade peace with China. Last spring, the United States and China hammered each other with triple-digit tariffs, threatening to end trade between the world's two biggest economies and briefly panicking global financial markets.

The two countries spent the rest of year trying to deescalate their trade conflict, reaching a truce in October that reined in tariffs, ended China's boycott of American soybeans and eased its restrictions on exports of rare-earth minerals and technologies critical for fighter jets, robots and other products.

The new tariffs, aimed at punishing Iran, would hit China because of its trade ties with Tehran. “President Trump's threat to increase tariffs by 25% against China and other trading partners due to developments in Iran underscores just how fragile the US-China trade truce is,” said former US trade negotiator Wendy Cutler, now senior vice president at the Asia Society Policy Institute. "Even if he does not actually implement the tariff hike, damage has already been done. This threat erodes trust between the US and China which is already at a low level."

Adnan Mazarei, a nonresident senior fellow at the Peterson Institute for International Economics, doubts that the tariffs would persuade the Iranian government to ease its crackdown on protesters. “I do not think this is going to be very successful," said Mazarei, a former deputy director of the International Monetary Fund with crisis-fighting experience in the Middle East. "They will not for this alone change their views or their practices. It is a repressive regime, and it is willing to pay a high cost in terms of people's blood to stay in power."